Can you renew your car insurance early?
You can't usually renew your car insurance policy early, but you can change your coverage levels or cancel your policy anytime. Don't cancel your policy without having a new one in place, as a coverage lapse will likely raise your rates.
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UPDATED: Jun 25, 2022
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- Car insurance policies last for six or 12 months, a period called the policy term
- Insurance companies initiate renewals, and you as a policyholder can’t renew your auto insurance until your company calculates your renewal rates and notifies you
- Many insurance companies begin the renewal process 45 days before policies expire
Auto insurance policies undergo periodic reviews for renewal. This process protects both insurance companies and consumers.
Insurance companies always initiate the renewal process. As a consumer and policyholder, you can’t initiate the renewal of your policy early. However, there are multiple steps in the car insurance policy renewal process, and you can take other actions regarding your policy.
Why You Can’t Renew Your Car Insurance Policy Early
Insurance companies don’t offer the option to renew a policy ahead of their own schedule. However, while you can’t renew your policy early, you can choose to cancel your policy whenever you want. Whether you are charged a fee when you cancel depends on your insurance company.
The other major event in the life of your policy is for it to expire. If you don’t pay for your policy renewal when the contracted term ends, your policy will expire. This is generally called a lapse in coverage by insurance companies.
Failing to have proper auto insurance can pose legal and financial problems if you are pulled over. In addition, lapses could potentially cause you to have higher car insurance rates in the future. The easiest way to avoid this is to pay your car insurance policy renewal on time, usually when you receive notice from your insurance company.
Why does car insurance renew?
Renewals for your auto insurance help both you and the insurance company. When your policy comes up for renewal, review your coverage levels and deductibles. You may be in a position to carry a higher deductible and reduce your rates.
You can also check for discounts that can help you save money. For example, some companies offer loyalty discounts to customers who have renewed policies multiple times.
Insurance companies benefit from policy renewals by taking the opportunity to review risk factors and adjust rates accordingly. They may also prompt you to take advantage of available discounts, thus helping you pay less and promoting loyalty.
Renewal rates may increase for a number of reasons, some of which have nothing to do with your driving record. For example, your rates may go up if an insurance company needs more money. Your rates may also increase if you have received a moving violation.
However, your rates may decrease if general risk factors change, such as fewer drivers on the roads. Industry practices also determine your renewal rates, so you should shop around for different car insurance quotes before renewing a policy with your current company. You may end up finding cheaper rates somewhere else.
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What is the car insurance policy renewal process?
Insurance companies begin a series of steps to decide on your policy renewal and new rates about 45 days before your policy ends. These steps include:
- Analyzing a motor vehicle report for each insured driver in your household
- Reviewing claims in files
- Looking for insurance claims filed through other companies
- Reviewing your discounts to determine if you are still eligible
Every state requires insurance companies to notify policyholders before their policy renews. These notifications should include rates for the new policy. Most states require insurance companies to send renewal documents at least 30 days before a policy ends.
If you don’t like the proposed rates for your policy renewal, this period allows you time to shop for another policy. You may be able to find a policy that better fits your budget when you compare car insurance quotes online. If you plan to switch auto insurance companies, always make sure you have new coverage in place before your current policy ends.
How to Make Changes Before Your Policy Renewal
You might be able to make changes before your auto insurance renewal. Potential reasons you may want to make changes before renewal include:
- Trading your current vehicle for a new one
- Adding another vehicle to your policy
- Adding another driver to your policy
- When you stop driving, or your driving habits change, such as transporting goods or passengers in your vehicle
Contact your insurance company about updating your coverage when these life changes occur. The insurance industry calls this type of policy change an endorsement. If you change your policy in this manner, you will receive an endorsement declaration document and a bill if you owe additional money.
Do car insurance rates increase at renewal?
Your insurance company can’t raise your rates until your car insurance policy is renewed. Once you sign on the dotted line for a specific insurance term, your rates are assured during that term, whether it is for six or 12 months.
This industry practice means your risk class can’t change during a policy term. For example, if you have an accident during an insurance policy term, your company can’t raise your rates until the renewal date. At that time, you can switch car insurance companies if you find more affordable quotes elsewhere.
Risk Classes Explained
When an insurance underwriter analyzes your application or renewal, multiple risk factors help determine how much you pay. These determining factors include:
- Driving record
- Age, marital status, and gender
- Vehicle features and type
- Insurance status and record
After a thorough review, the company assigns you to one of three driver risk categories: preferred, standard, or high-risk. Your risk class directly affects your car insurance rates, but some companies weigh these risks differently.
For example, some companies may also check your credit record. However, if you have a troubled financial past and are working on clearing it up, talk to your insurance company. Many are willing to work with you on this matter, especially if you have had steady coverage and consistent on-time payment history.
The Final Word on Car Insurance Policy Renewal
While you, as a consumer, can’t initiate early renewal for your car insurance policy, you can choose to end the policy early. Just make sure you have other coverage in place and are aware of potential cancellation fees some companies charge.
The renewal process starts early, and you should receive notice about your policy renewal 30-45 days before the term ends. Ultimately, the renewal process is designed to benefit both insurance companies and consumers.
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